Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1887-09-08
Booss VERSUS GROWTH.

coinage OF words derived from Latin or
Greek roots. The werd Boom" is an
example in point. 1t Is said to owe its
origin to the food action of rivers. A
river at its highest foods is said to be
booming" The metaphor thus borrowed
and applied in a similar sense to the move
ments of population, the Price of stocks,
or the market values of commodities, is
very expressive. A rapid rise in bread
stufis is said to be a booming market The
efforts TO create an excited market is
called booming the market" The value
of every commodity, from lace to land
will be determined by the law of supply
and demand. However valuable intrinsi
cally land may be-whether for the value
of its product as agricultural land, or for
Its value as space on the surface of the
earth as for business or residence purposes
its steady, persistent and enduring value
will depend upon the demand for it. The
lands OF California were just as productive
and fertile under the Spanish occupation
as they are to-day, but the absence of de-
mand kept them at low prices. Where
an increasing demand is apparent values
are often anticipated, and a booming mar
ket is the result. Such market is usually
promoted by the holders of property who
desire to sell, but more particularly by
the brokers whose commissions are depend
ent upon transactions If the market rises
beyond point where it will be sustained
by an increasing demand, it will inevitably
recede. To be sustained, the increased
demand must Immediately follow the rise.
In movements where there are rapid ac-
cesslons of population, values will newt
ably rise. The accession of new capital
and new occupants creates a demand not
therefore known, and hence legitimately,
honestly and temperately stimulates the
market. Prices are always proportionate
10 competition between purchasers and sell
ers. If there are more persons desiring to
purchase than TO sell, the competition is
in favor of the seller, and prices rise. If
the balance is reversed, and there are more
persons desiring to sell than wish to buy.
then the competition is between sellers
and the prices decline. 1t is for this rea-
son that small subdivisions sell for a larger
sum IN the aggregate than large holdings.
Small subdivisions of land bring them
within the reach of large number of pur-
chasers, and competition between these
raises the price. 1t is one among the very
few compensations for all the harm which
boom intlicts upon any market, that
when 1t relates to land it induces the sub
division of large holdings. Large areas
are accessible to the very few. They may
become so large and the prices SO high as
to eliminate competition altogether. 1t
may be said of any piece of land worth
from 100000 upward that there is abso-
lutely no competition for it among
purchasers. There may be excep-
tional instances where land ap-
gregating in value 100000 is
offered SO low that several persons may
desire to purchase; but raise this mini
mum, and when you reach 100000 in the
value of land, there is perhaps not more
than one individual in any commonwealth
ready and willing to purchase and pay
that amount OF money in exchange for the
property. This absence of competition
Keeps the price of large holdings at low
figure. In any city or town of California.
the residence property worth from $1,000
to $1,000, maintains its value through sue
cession of years, while property costing
from $4,000 to 100000 inevitably de-
ciines. There is not a palatial residence in
the city of New York or San Francisco, or
of Sacramento, for that matter, which
would sell for the cost of its construction
because the persons able to make such pur.
chases are SO few that competition is elm
mated There is no greater absurdity ex-
listing among men than a boom in com.
munity where there is neither reinforce.
ment of capital nor of population. Such
boom is necessarily selfconsuming, and
will therefore burn itself ont. San Jose
and Oakland have furnished recent and
very instructive examples In both places
the purchasers placed the property they
had purchased Immediately upon the
market. The reason for this was that the
purchasers were not intending settlers
They were not so many additions to the
populations of the cities named. They be-
iieved i'll the market, but not in lis
perPetuity. They therefore purchased
land only to sell. With each pur-
chase, therefore, the quantity of land on
the market increased. At first competition
was IN favor Of the seller. because large
number of persons wished 10 buy, but
each of these buyers became in turn 4
seller, and the market thus overloaded
broke down. If these booms had arisen
upon sudden increase of population. they
would have been referable to sudden in
crease of demand for use and occupation.
and while the prices which feverish and
imaginative expectation had placed upon
property might not have been retained.
values would nave receded only as far as
the normal conditions warranted. There
Is wide distinction between the growth of
a community and n boom in the real estate
market Growth means an additional de-
mand fer lands to be cultivated, and prop
erty to be actually occupied. It means
additional space for warehouses and stores
to accommodate the increase of commerce,
an additional acreage for the increase OF
productive capacity and industry. Such q
stimulation of the real estate market is
always desirable, because it is real and not
fictitious. A mere boom, however, among
fae people owning and occupying property,
with ne corresponding increase in demand
due to the increase of population, is disas-
trouS to every element of growth. The
subdivision OF large land-holdincs into
small areas, bringing the aggregate cost Of
single holding within the reach Of =